Renters Rejoice!

Overview of important developments in the Toronto Metro housing market and macro reported in December 2024

Highlights

• Toronto Metro real estate market slowed down in December.

• The rental market balance continued to improve, but rent prices declined below 2022 levels.

• A record number of study permits were issued and renewed in October.

• Overall population growth is slowing, however, the number of non-permanent residents continued to increase.

• Toronto Metro new construction sales hit record lows, with fewer than 10,000 units pre-sold in the last 12 months.

• The Bank of Canada’s 0.5% rate cut did nothing to housing affordability.

• Toronto Metro unemployment rose to 9.2%, the highest since 2012 (excluding the pandemic).

• Mortgage arrears, credit card liabilities, and business bankruptcies increased.

Real Estate Market

Happy New Year, my dear readers! December is typically a month when many real estate metrics reach seasonal extremes. One notable example is the sales-to-new-listings market balance indicator.

As a result, market changes during this month should be taken with caution, so keep this in mind. In Toronto Metro, there was a slowdown in December with both sales and new listings declining more than they typically do during this month.

Active inventory increased compared to the 10-year average. However, this period includes two instances of market exuberance in 2016 and 2021, when December inventory was unusually low. Seasonally adjusted data, which is more accurate, shows no actual increase in active inventory for December.

This distortion affects market balance indicators, with months of inventory appearing weaker than it is. Despite this, it’s reasonable to conclude the market slightly weakened in December.

Prices remained resilient, with little change over the past two years.

The trend noted in previous newsletters, where 416 condos outperformed those in the broader GTA (link), did not continue in December. In fact, 416 condos showed relative weakness. Overall, the condo sector remains weaker than the broader market.

Rental Market

The Toronto Metro rental market balance strengthened for the third consecutive month on a seasonally adjusted basis in December, making this an important development.

However, the rental market remains weak, with rent prices falling below 2022 levels.

Rent prices for newer rental units are now considered affordable, making current